GST, a transformative tax reform, aims to streamline and unify India’s intricate indirect taxation structure. GST enrollment involves the registration process to obtain a unique GST identification number (GSTIN). Yet, circumstances may arise where a GST-registered business seeks to cancel or reinstate its GST enrollment for various reasons. This article discusses the processes and timeframes for both GST enrollment cancellation and revocation, shedding light on the advantages and challenges associated with these actions.
What Is GST Enrollment Revocation?
GST enrollment revocation is the procedure for reversing the cancellation of GST registration reinstating the status of a GST-registered entity. This signifies that the entity can once again engage in the collection, payment, and claiming of GST and input tax credits under GST regulations.
Top reasons for voluntary GST registration cancellation
- Closure or discontinuation of the business.
- Business transfer, amalgamation, merger, de-merger, lease, or other relevant changes.
- Alteration in the business’s constitution leads to a PAN change.
- Dipping below the GST registration threshold due to reduced turnover.
- The demise of the sole proprietor.
Who Is Eligible for GST Enrollment Revocation Application?
GST enrollment revocation applications can be submitted exclusively by individuals whose registration has been cancelled by the competent officer. Such cancellations can arise from various factors, including non-compliance with return filing, failure to pay taxes or breaches of regulatory norms.
However, individuals who have voluntarily cancelled their registration or those whose businesses have been shut down, transferred, merged, or demerged are ineligible to seek revocation.
Time Frame for GST Enrollment Revocation
The standard time limit for GST enrollment revocation is 30 days from the date of the cancellation order. However, there is a provision for potential extensions of this time limit. Such extensions may be granted by the competent officer, appellate authority, or the high court, contingent upon the specific circumstances.
Should the application for revocation be submitted within the prescribed time frame and approved by the competent officer, the revocation order, denoted as Form GST REG-22, will be issued within 30 days from the receipt of the application. The communication of this order will occur through email or SMS.
When the competent officer rejects the application, a rejection order will be issued in Form GST REG-05 and relayed to the applicant. Subsequently, the applicant can file an appeal against the rejection order within a 3-month from the order date.
GST Officer-Initiated Cancellation
A GST officer can initiate the cancellation of a GST registration under specific circumstances. This process commences with issuing a show-cause notice in Form GST REG-17.
A GST officer can instigate the cancellation procedure if any of the following situations arise:
- Continuous non-filing of GST returns by the taxpayer.
- A voluntary GST registrant fails to commence business operations within six months.
- The registered taxpayer violates one or more provisions of the GST Act or its Rules.
- The GST registration was acquired through deceit or fraudulent misrepresentation.
- Tax evasion or improper input tax credit claims are observed, where a taxpayer supplies goods or services without proper invoicing or generates invoices without corresponding provision of goods or services.
Steps to Apply for GST Enrollment Cancellation
Access the Official Website:
Visit the official Goods and Services Tax website.
Select the ‘Login’ option, and enter your valid login credentials, including your username ID and password. Complete the auto-generated captcha to access your GST account.
Navigate to Services:
In your account, locate the ‘Services’ option. Click on it to access various service options.
Choose Enrollment Cancellation:
From the service options, select ‘Application for Abrogation of Neutralize Enrollment.’
Provide Cancellation Reasons:
You will be directed to a new page where you’ll need to state the reasons for the cancellation. Select the appropriate reason and submit it. Attach the necessary supporting documents.
Complete the verification process by providing the details of the legal signatory, including names and other relevant information. Save your application for future reference or directly submit it.
Upon submission, an OTP will be sent to your registered phone number or email provided on the GST Portal. Validate your application with this OTP.
After OTP validation, you will receive an acknowledgement letter on the website and through your registered mobile number.
The concerned GST officer will review your application. If the officer is satisfied with your reasons for cancellation, they will initiate the process. An order for cancellation will be passed.
Once the officer approves your request, you will receive an SMS or email authorising the cancellation of your neutralised Goods and Services Tax enrollment. Your GSTIN number will be reactivated.
If the GST officer does not find your reasons valid for cancellation, your application will be rejected, and your GSTIN will remain inactive.
Filing the Final GST Return
Following the cancellation of GST registration, a final GST return (Form GSTR-10) must be submitted within three months from the cancellation date or the date of the cancellation order, whichever is earlier. This ensures that the taxpayer has no pending GST dues.
It’s important to note that this requirement does not apply to input service distributors or non-resident taxpayers governed by Sections 10, 51, or 52.
Benefits of Voluntary GST Cancellation
Preventing Inactive GST Registration:
If no business activity occurs after obtaining GST registration, initiating the GST cancellation process is essential. Allowing GST registration to become inactive by not filing returns can hinder the possibility of applying for a new GST registration with the same PAN.
Avoiding Government Cancellation:
When the government cancels a GST registration, the taxable person must request the cancellation’s revocation and settle any outstanding late fees. After reinstatement, the taxpayer can either proceed with the GST cancellation or continue filing GST returns.
To maintain a seamless process, taxpayers must monitor compliance once they receive GST registration. If there is no commercial activity, promptly apply for GST registration cancellation to avoid unnecessary complications.
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Cancelling or reinstating your GST registration is a significant step in the tax system. It can be complicated, and there are rules to follow. So, it’s crucial to think carefully about why you want to do it and get advice if you need clarification. Changing your GST status can affect how your business operates and how much tax you pay, so it’s essential to be cautious and make well-informed decisions.
Frequently Asked Questions(FAQs)
1. Can I Choose to Register for GST Even If I’m Not Required To?
Yes, you have the option to register for GST voluntarily. If you want to claim input tax credit, you can record even if you don’t meet the mandatory registration criteria. However, once registered, you must follow the same rules and regulations as a regular taxpayer.
2. How Long Is a GST Certificate Valid?
A GST certificate remains valid until surrendered, cancelled, or suspended. The exception to this rule is for GST certificates issued to non-resident taxable persons and casual taxable persons, which have a specific validity period.